Mining Sierra Leone Diamonds

Dove Diamonds & Mining is currently mining an area of the Sewa River known as the “Baimbawai Pool,” located in the Tinkonko Chiefdom in the southern part of Sierra Leone. The Sewa River is an internationally known alluvial diamond river, which has produced gem class quality diamonds.

Mining in Sierra Leone

Political History

Sierra Leone has been a major diamond producer for 70 years, but it has one of the lowest Gross National Products in the world. Civil war ravaged the country from 1991 to 2002, primarily over the distribution of wealth from the country's diamond mines. In October 1999, the U.N. Security Counsel established the United Nations Mission in Sierra Leone (UNAMSIL) to help implement disarmament.

At the beginning of July 2000 the United Nations Security Council decided to impose an 18 month ban on diamond exports from Sierra Leone. Recognizing that diamonds had been fueling the conflict that the rebels had been mining diamonds and selling them to fund their weapons purchase and other activities, including human rights abuses. Additionally, in July 2001, a diamond mining ban was announced in Sierra Leone in an attempt to address the violence and curb human rights abuses.

UNAMSIL successfully completed its mission in December 2005. It was succeeded by a new mission, the United Nations Integrated Office for Sierra Leone (UNAMSIL) established by the Security Counsel to help consolidate peace in Sierra Leone.

Mining History

Diamond output in Sierra Leone was 600,000 carats in 1999, 2000, and 2001, 250,000 in 1998, and 400,000 in 1997; most production was by artisanal miners. It was believed that a substantial portion of the diamonds close to the earth's surface was smuggled out of the country. Alluvial diamonds, first discovered in Kono District in 1930, were widely scattered over a large area, but particularly along the upper Sewa River. The main diamond deposits were the Koidu and Tongo fields. Diamond Works Ltd., of Canada, which owned 60% of the Koidu mine (reserves of 2.67 million carats), announced in 2001 that it was returning to Sierra Leone. Diamond Works also held diamond exploration licenses on the Sewa River with reserves containing 1.7 million carats. Production of alluvial gold in 2001 was 30 kg, down from 123 kg in 1994.

For 25 years, the Sierra Leone Selection Trust (SLST), a subsidiary of the Consolidated African Selection Trust, had exclusive diamond prospecting rights and gave the government 27.5% of its annual net profit. However, this monopoly, plus numerous finds of gem diamonds at or close to the surface, encouraged so much illicit mining and exportation that, in 1955, the government renegotiated SLST's concession, limiting it to two areas, Yengema, in Kono District, and Tongo, in Kenema District, and compensated the company for surrendering its rights in other areas.

In 1956, the government introduced the Alluvial Diamond Mining Scheme, in which Sierra Leoneans were issued licenses to dig in declared areas totaling more than 23,300 sq km (9,000 sq mi). In addition to a licensing fee, each licensee had to pay land rental to the local chiefdom authorities and could employ up to 20 diggers. A buying organization, the Government Diamond Office (the Government Gold and Diamond Office since 1985), was set up in agreement with the Diamond Inc., in London. Foreigners, who had figured significantly in illicit diamond dealing, were removed from the diamond-mining areas. In 1962, the government ordered the SLST to sell all its diamond through the government office. In 1970, the government acquired a 51% interest in SLST and formed the National Diamond Mining Co. (NDM).

In 1991, the government started returning control of diamond and gold export activities back to the private sector, to curtail illicit trading and maximize revenues. New mining policy in 1994 made requirements for licensing miners and exporters more rigid, to address the heavy revenue losses from illegal trading in diamonds and gold. NDM ceased operations in 1992, partly because of rebel activities in the Yengema mining district.

A 1999 amendment to the 1994 Mines and Minerals Act introduced procedures for sale and export of precious minerals by license holders, and penalties for unlawful possession or smuggling of precious minerals. In 2001, Sierra Leone and Angola introduced a diamond certification scheme in response to UN sanctions aimed at prohibiting importation of diamonds from rebel-controlled areas in the countries.

Current Status

Currently, the mining business in Sierra Leone includes about 2,500 small operations. In 2007, Sierra Leone officially exported over $175 million worth of diamonds, government records show. That is a vast improvement over the $24 million officially exported in 2001, before stringent new rules known as the Kimberly Process required diamond deals to be certified by the authorities.

Overview of Company

Dove Diamonds & Mining was formed to prospect for, mine, extract, cut, polish, buy, sell, export, handle and otherwise deal in diamonds and other precious stones, gold, platinum and all other precious metals in Sierra Leone. The Company intends to mine an area of the Sewa River known as the “Baimbawai Pool,” located in the Tinkonko Chiefdom in the southern part of Sierra Leone. The Sewa River is an internationally known alluvial diamond river, which has produced gem class quality diamonds.

The Mining Site and The Mining Agreement

The Company has chosen to mine the Baimbawai Pool in the Sewa River based on its belief that it will produce gem quality diamonds. The principals within Dove Diamonds previously mined this area from 2003 to 2007. The Baimbawai pool is owned by individuals from two villages, Gandorhun and Njala, located on either side of the river. On January 26, 2008, these five individuals entered into an agreement with Dove Diamonds allowing the Company to dredge, mine and explore this land. The five individual landowners (the “Landowners”) have agreed to allow the Company to use its license to mine this land.

Mining License

On August 31, 2005, the government of Sierra Leone principals of Dove Diamonds, a license to mine minerals in a certain area in Sierra Leone pursuant to the Sierra Leone Mines and Minerals Act of 1996 (the “Mining License”).

Current Operation

Our goal is to become a full service diamond operation; to mine, refine and sell diamonds.

Operational Goal

We employ local people to work the Baimbawai Pool. Any diamonds currently mined are sold in the rough conditions in which they are found. We sell these diamonds in Sierra Leone and around the world. We are currently in this phase now with 85 current miners and two dredges in current operation.

Future Production

We will purchase an additional two dredges (for a total of four) to triple our gravel production. We will hire an engineer to bank the river and to bring the water levels down to the point where we will be able to dredge twelve hours per day, twelve months per year. As in Stage II, we intend to purchase rough diamonds from third parties. Our plan is to establish our own cutting facility and wholesale office, so that we can cut and sell our diamonds and those we purchase. We expect that this would offer a new income stream and greater profits.

Dolat Ventures Inc. (OTC PINK: DOLV) announced today that it has completed a corporate restructuring and that Millenium Mining LLC its wholly owned subsidiary has signed a joint venture partnership with a private investor to restart diamond mining at its mining location near Bo, Sierra Leone. The joint venture will be financed by private funds, for the purpose of dredging, mining, continuing exploration and collecting and selling diamonds, and other deposits and Millenium Mining will put forth its mining license with all landowners in the Tikonko Chiefdom into the joint venture.

“It has been a long time, but we are finally ready to move from artisanal mining on the Sewa River, to full scale diamond production and automation,” said Dovid Hauck, Chief Executive Officer of Dolat Ventures and Millenium Mining. “Historically where we are located we have averaged approximately 0.4 carats per ton of rock, with a daily average of six to ten tons of production per day by artisanal mining when in production. By being able to fully dredge, get the modern equipment needed, and fully automate we will expect to process up to 800-1000 tons of rock per day. We have been mining here for nearly eight years and we know the carat concentration averages are fairly steady, the business is built on being able to process large amounts of rock every single day,” he added.

Dolat's Millenium Mining is located in the Sewa River, located in the heart of Sierra Leone, formed by the junction of the Bagbe and Bafi rivers; it flows 150 mi (240 km) to join the Waanje River and form the Kittam, which empties into the Atlantic Ocean. The country's most important commercial river, it has historically produced the bulk of Sierra Leone's diamond exports.

Mr. Hauck noted, “Our investing partner is committed to the full range of financing needed for the project and we expect to be able to announce full details shortly. We presently are finalizing Sierra Leonean legal agreements, with the US based joint venture agreements already signed.”